Haier Group

Haier Group

Overview: The World's largest White Good Manufacturer

Haier Group is a Chinese multinational consumer electronics and home appliances company. It is headquartered in Qingdao, China and its products include air conditioners, mobile phones, computers, microwave ovens, washing machines, refrigerators and televisions. In 2011, the Haier brand had the world's largest market share in white goods with 7.8 percent. Its main competitors are the US-based companies Whirlpool Corporation and General Electric.

The Haier Group increased its sales by more than 11,500 percent from 1984 to 2000

The origins of Haier date back long before the actual founding of the company. In the 1920s, a refrigerator factory was built in Qingdao to supply the Chinese market. After the establishment of the People's Republic of China in 1949, this factory was taken over and turned into a state-owned enterprise.

In the 1980s, the company was close to bankruptcy. The factory in Qingdao produced only 80 refrigerators a month with a failure rate of more than twenty percent. The Qingdao government then turned to a young assistant city-manager, Zhang Ruimin, responsible for a number of city-owned appliance companies. Zhang was appointed the managing director of the factory in 1984 and with him the success came.

In a joint venture with the German company Liebherr, the company “Qingdao Liebherr” was founded and since 1992, the name of the company is Haier Group. In the following years, Haier grew constantly, with a sales increase form USD 0.5 mn in 1984 to USD 6.45 bn in 2000, a growth of more than 11,500 percent.

Internationalization: Partnerships and Takeovers as Success Factors

By the end of the 1990s, Haier was the most recognized brand in China. The aim of Haier's internationalization strategy was to build a global brand name and therefore, the company opened a production facility in Indonesia in 1996 and in Malaysia in 1997.

In 1999, Haier opened a production subsidiary in the US and had its first success with small refrigerators and electric wine coolers. These sectors only had a small market share very little competition. After pursuing this niche strategy successfully, Haier started producing bigger refrigerators, and increased its revenue up to USD 200 mn in 2002.

In 2001, Haier acquired the Italian refrigerator plant Meneghetti Equipment. With this takeover, Haier gained two design centers located in Lyon and Amsterdam as well as the distribution network of Meneghetti.

Haier has mainly grown due to partnerships and takeovers. Since 2002, Haier has a partnership with Sanyo and four years later, a joint venture with this company was established in Osaka. In 2011, Haier bought the white good division of Sanyo. With this acquisition, Haier wanted to boost the market share in Japan and to enter the Indonesian and Vietnamese market.

In 2012, the Haier Group made a bid for the New Zeeland Corporation Fisher and Paykel of USD 700 mn, with the aim of increasing its market share not only in New Zeeland, but also all over the globe.

Haier sells around 75 percent of its products overseas and has customers in 160 countries around the world.

Haier established its first R&D institute in 1993 in Qingdao. It has cooperated with 28 companies from the US, Japan, Germany and other countries. Today, the Haier Group has R&D centers In Beijing, Milan, Seoul, Tokyo and Los Angeles.

The following graphics represent Haier's patent and utility model applications. While the first two graphs depict the distribution over years and across countries, the last two graphs represent the distribution across technology areas.

The main difference between a patent and a utility model is the durability and the strength of protection. Patents are protected for twenty years, while utility models are only protected for ten years. Thus, an utility model can be described as a weaker form of patent.

The first chart shows the number of applications Haier filed between 2000 and 2010. The chart illustrates an increase of applications from 2000 to 2006. Only in 2004, the number of patent and utility model applications did not grow. In this year, Haier filed only around 110 intellectual property rights. Compared to the period between 2007 and 2010, this is a very small number. In this period, Haier applied always for around 300 applications per year.

The following chart shows the geographical distribution of patent and utility model applications. It depicts that China is the most important market for Haier, accounting for most of its applications between 1999 and 2010. It also reflects that Haier tries to establish its brand in other countries. Between 2008 and 2010, Haier increased the number of applications in other countries like Japan, the US and Europe. This illustrates the purpose of Haier to become a global player.

The following two charts show the patent and utility model applications across technological sectors. Haier filed the most patent and utility model applications in the sector consumer goods and equipment with more than 1,500 applications. This illustrates the fact that Haier is the world's biggest producer of white goods. Another important sector is thermal processes and apparatus, which is important for a producer of refrigerators like Haier, too. In these two sectors Haier filed around 60 percent of its total applications.